Tentative Measures for Administration of the Transfer of Insurance Business by Insurance Companies

(Promulgated by the China Insurance Regulatory Commission on August 26 2011 and effective as of October 1 2011.)

Order of the CSRC [2011] No.1

Article 1: These Measures have been formulated pursuant to the PRC Insurance Law (the Insurance Law) in order to regulate the transfer of insurance business by insurance companies, protect the lawful rights and interests of proposers, the insured and beneficiaries, and maintain the order of the insurance market.

Article 2: The China Insurance Regulatory Commission (the CIRC) oversees the transfer of insurance business by insurance companies in accordance with the law and as authorised by the State Council.

Article 3: The transfer of all or a part of its insurance business by an insurance company shall be subject to the approval of the CIRC.

The criteria for “a part of its insurance business” as mentioned in the preceding paragraph shall be specified separately by the CIRC.

Article 4: When transferring insurance business, an insurance company shall comply with the principles of free will, transparency, fairness and impartiality.

Article 5: When transferring insurance business, an insurance company may not divulge trade secrets or the private information of individuals learnt in the course of such transfer, or harm the lawful rights and interests of proposers, the insured and beneficiaries.

Article 6: The parties to an insurance business transfer shall enter into an insurance business transfer agreement on the basis of equitable negotiations.

Article 7: The insurance company that is the transferee of insurance business shall, in accordance with the original insurance contract, assume the obligations toward the proposers, insured and beneficiaries borne by the insurance company making the transfer.

Article 8: The insurance company that is the transferee of insurance business shall satisfy the following conditions:

(1) the insurance business being acquired falling within its scope of business;

(2) having a sound corporate governance structure and sound internal control systems;

(3) being solvent and, after the acquisition of the insurance business, its solvency complying with relevant CIRC provisions;

(4) not having a record of having been subjected to major administrative penalties imposed by a financial regulator during the most recent two years;

(5) having an establishment in the place where the policies composing the business it is acquiring were first issued;

(6) having conducted a feasibility study of the operation and management of the business it is to acquire; and

(7) other conditions as specified by the CIRC.

Article 9: The parties to an insurance business transfer shall engage a law firm, accounting firm or other such professional intermediary firm to assess the value, compliance, etc. of the insurance business to be transferred.

Article 10: The parties to an insurance business transfer shall assess, in accordance with relevant CIRC provisions, the liability reserve for the business to be transferred to ensure that it is sufficient and reasonable.

Article 11: The transfer or acquisition of insurance business by an insurance company shall be subject to the approval of its board of directors, shareholders' meeting or shareholders' general meeting. The transfer of all of an insurance company's insurance business shall be subject to the approval of its shareholders' meeting or shareholders' general meeting.

Article 12: The parties to an insurance business transfer shall submit the following materials in triplicate to the CIRC:

(1) the basic particulars of the parties to the insurance business transfer;

(2) the insurance business transfer agreement;

(3) the procedural arrangement for the insurance business transfer;

(4) a practicable plan for the operation and management of the insurance business to be acquired;

(5) the assessment report of the professional intermediary firm;

(6) the assessment report for the liability reserve for the business to be acquired;

(7) the solvency report for the preceding year of the insurance company making the acquisition and an analytical report on the impact of the business to be acquired on the solvency of the insurance company making the acquisition;

(8) the documents indicating the approval of the insurance business transfer agreement issued by the board of directors, shareholders' meeting or shareholders' general meeting of each of the parties to the insurance business transfer; and

(9) other materials that the CIRC specifies be submitted.

Items (3), (5) and (6) must be jointly signed in confirmation by the parties.

Article 13: Once the CIRC approves a transfer of insurance business, the insurance company making the transfer shall inform the relevant proposers and insured in writing of relevant matters such as the basic particulars of the insurance company making the acquisition, the general outline of the transfer plan and the assumption of liability, and secure their consent therefor. If the insured under a personal insurance contract has died, the insurance company making the transfer shall inform the beneficiaries in writing and secure the consent therefor.

The parties to an insurance business transfer shall reasonably implement the transfer plan and duly dispose of matters relating to the transfer.

Article 14: Once the CIRC has approved an insurance business transfer, the parties thereto shall jointly announce the same no less than three times in the newspapers designated by the CIRC, and post the same on their websites for not less than one month.

Article 15: If an insurance company transfers all of its insurance business and terminates its business activities in accordance with the law, it shall carry out the procedures for the cancellation of its insurance permit with the CIRC within 15 working days from the date of completion of performance of the transfer agreement and carry out the relevant procedures with the administration for industry and commerce.

If an insurance company transfers part of its insurance business resulting in a change in the particulars recorded on its insurance permit, it shall carry out the procedures for the change in accordance with relevant CIRC provisions within 15 working days from the date of completion of performance of the transfer agreement.

Article 16: If an insurance company violates these Measures in carrying out an insurance business transfer, the CIRC will order it to rectify the matter within a specified period of time and impose penalties in accordance with the law.

Article 17: These Measures shall not apply to reinsurance as specified in Article 28 of the Insurance Law or the transfer of insurance business as specified in Article 92 or Article 139 of the Insurance Law.

When transferring insurance business, an insurance company may not violate the second paragraph of Article 89 of the Insurance Law.

Article 18: If the CIRC provides otherwise in respect of the transfer of insurance business by insurance companies, such provisions shall prevail.

Article 19: The CIRC is in charge of interpreting these Measures.

Article 20: These Measures shall be effective as of October 1 2011.